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Introduction

Many businesses in coastal regions face the same problems regarding seasonality. Where their businesses feel vibrant and successful during the high points of the year, they can feel rather slow and failing during other moments in the year. These fluctuations in high and low points can cause great swings in income throughout the year as well. Which makes it important to survive as a business during the low moments in the year. In order to achieve stability throughout the entire year, businesses need to be adaptable to changes and seek for ways of diversification. 

The main aims of this BIte Size are: 

  • Understand how seasonality might affect your (prospective) offer¬†
  • Learn about different diversification strategies¬†
  • Reflect on opportunity for adaptability and diversification to take advantage of during ‚Äúslower‚ÄĚ seasons¬†

THEORETICAL INFORMATION 

Seasonality has always been a fundamental factor in any tourism-related activity, both because of the weather conditions and the holiday season. In addition, because of increasing ocean temperatures, seawater acidity, coastal pollution and other changes, the blue economy needs to be adaptable to changes one way or the other. Therefore, also businesses and organisations in  the field need to be adaptive. They do not only need to respond to the changes that the environment brings them, but also the consequences of the environment changes.  

Moreover, responding to changes in the environment is crucial to every business, whether this entails the actual environment or the business environment. This is simply because nothing is forever. Times change, businesses change and people change. Thus, if you want to succeed in a business, related to the blue economy or not, you will need to learn how to adapt.  

The ability to adapt is a great competitive advantage for organisations, since this means that the organisation is: 

  • Able to foresee changes¬†
  • Able to quickly react to the changes¬†
  • Able to transform its business model¬†
  • Open to new ideas¬†
  • Able to detect new opportunities faster¬†
  • Less likely to panic when things do not go according to plan¬†

Being open to new ideas and being able to detect new opportunities can make a difference for businesses that mainly depend on seasonality, since this will give them the ability to find opportunities in diversifying their offerings.  

Diversification  

Running your own business will always feature a certain element of risk. From market disruptions to public health emergencies, no one can predict what tomorrow holds. Running a business might even be more vulnerable to challenges for smaller businesses, since their comparatively limited revenue streams, especially if these businesses are in their early days. 

In order to minimise the risks, businesses can choose to diversify their offerings. This will instantly give them more markets to rely on. Moreover, if diversification is carried out successfully, it can offer organisations a more stable and secure income.  

Business diversification is a strategy in which businesses expand either by developing new products or services, by venturing into new markets or industries, seeking for new target groups or a combination of the aforementioned. This means there are multiple diversification strategies. These strategies are as followed: 

  • Concentric diversification¬†

Concentric diversification involves expanding the current offerings with similar products or services. Thus, this strategy focuses on developing a new range with products or services that are related to the current range. This means that this type of diversification is very much in line with the core business. 

For example, a restaurant that chooses to add a high tea to its offerings, or that decides to collaborate with local suppliers to adapt its menu to different seasons. 

  • Horizontal diversification¬†

Within this strategy new products and services are developed that are outside the current line and unrelated to the core business. This means that as a business, you are providing new assets that complement your core business and that are likely to be appealing to your current customers. 

Think of a business that rents out boats, that adds renting out bicycles, for example.  

  • Vertical diversification¬†

Vertical diversification is a strategy where businesses diversify their operations across the supply chain, including both forward as backward expansions. Forward vertical diversification is looking for options that are closer to the integration when the business is at the end of the supply chain. 

For example, an organisation that generates energy chooses to merge with an energy supplier. 

Whereas backward vertical diversification is looking to find opportunities in the upstream side of the supply chain. 

For example, a support service company in commercial cleaning that develops their own cleaning products or that has an alliance with a company providing them the cleaning products.  

  • Conglomerate diversification¬†

This diversification strategy is not related to anything within the organisation as it is. In conglomerate diversification the business chooses to add new products or services that are different from both the current assets as it is unrelated to the core business. 

This could be, for example, a company in fishery that opens a bed and breakfast.  

Diversification is a valuable strategy for profit and growth as well as finding new opportunities to solve seasonality. Besides diversification, there are some more growth strategies which are all part of the Ansoff Matrix: 

Find out more about the Ansoff Matrix and corresponding growth strategies in this video:  https://www.youtube.com/watch?v=9lSk7rc289o  

Seasonality & diversification  

In order to increase your revenues during your business’s slow season, you could try to diversify. When you choose to add products or services, it is important to consider whether you want to attract the same kind of customers, or whether you want to stay in your industry, or other factors of the different diversification strategies. Moreover, the extra assets that you will provide need to build upon your main business and should not remove your focus from this main business that you rely upon.  

In order to bridge the slow season, you should look for opportunities that have different peak seasons, or maybe even ideally, discover products or services that are not seasonal, so you can keep your overall revenues consistent.  

Creativity, being open and curious to find new opportunities are important in finding the right solution for seasonality. Think of ways that you can add value to customers in the low points of the year, or think of other companies you can collaborate with.  

Other ways of finding new opportunities is by thinking of what ‚Äėpull factors‚Äô you can use to attract more business.¬†

For example, in the slow season there might be fewer crowds. Use the argument of fewer crowds in order to attract those who prefer this. Or include activities, products or services that are needed or can be done in the low points of the season, for example, during poor weather.  

Other solutions for seasonality  

Even though diversification is one solution to ensure stability and security in the off seasons, there are many more things you can do to minimise the risks of the slow season. Therefore, here are some tips on what you can do to keep your business afloat throughout the year.  

  • Understand and manage the offseason expenses¬†

If you’re a (prospective) business owner, you always need to understand your cash flow and your expenses, but this might even be more important for seasonal businesses. By understanding the costs in your off seasons, you can look for ways to minimise, cut or spread your business expenses.  

  • Keep in touch with your customers or find new customers¬†

Even though peak season might be over, it doesn’t mean your customer relationships are over. Therefore, it is crucial to stay in touch with your customers throughout the year. Moreover, you can use the time in the slow season to build new relationships or build upon the relationships in order to retain your customers. 

For that you can use, among other tools, digital presence and social media. 

  • Use the off seasons to plan ahead and make strategies¬†

Even though it might feel like a useless period of time, you could use the slow season as a period in which you can improve your business/performance. You can take time to plan ahead, train yourself and/or your employees, and design strategies for the future. Additionally you can reflect on the season before and use the information and experiences for the next season. 

Some of the things you can look into are: 

  • Inventory¬†
  • Staff¬†
  • Suppliers¬†
  • Maintenance¬†
  • Business model¬†

If you want to dive deeper into finding opportunities for seasonality, you can also choose to create a seasonal marketing plan. Read this article to learn how to create such a strategy: https://rockcontent.com/blog/seasonal-marketing/  

As mentioned before, running a business always features a certain element of risk. This means that also in trying to find the right solutions to adapt to the environment and the seasons, there is always a chance your efforts won’t be successful. 

Therefore, no matter what your plans are, in order to prevent a potentially profitable project from failing, make sure to conduct as much research as possible. Try to minimise your risks, before jumping the gun! 


Sectorial info

    Tourism & Hospitality 

    The tourism and hospitality sector can highly depend on seasonality. Making it extremely important for them to adapt to the slow seasons when necessary. Therefore, diversification could be a nice solution to attract customers in the lower points of the year. 

    Businesses within this sector could choose to collaborate and diversify their offerings with these collaborations. However, companies can also choose to involve in something completely different and make use  of conglomerate diversification. 

    You can learn more on how to mobilise your ecosystem to co-create new products/services within our ‚ÄúYour Ecosystem‚ÄĚ area of knowledge.

    Leisure & Sport 

    Depending on the business within this industry, they are influenced by seasonality. Think about a small aquatic sports company which specialised in surfing activities during the summertime. Making it for some of the businesses is also very important to adapt to their environment. 

    In order to adapt to seasonality, organisations in this sector have multiple opportunities. Organisations can choose to collaborate with businesses in their sector, or maybe the tourism sector, or they can expand their own offerings. 

    You can learn more on how to mobilise your ecosystem to co-create new products/services within our ‚ÄúYour Ecosystem‚ÄĚ area of knowledge.

    Fishery

     Depending on what fish can be caught and during what periods of the year the fish is swimming in the local area, the fishery is influenced by seasonality. Though, when different fish swim in different times of the year, the sector could maybe easily diversify to selling other types of fish (depending on the availability and feasibility of course). However, a fishery can also choose to add something completely different to its product/service offerings.

    Support Services

     Seasonality also does not influence all organisations in the support services industry. Again, it depends highly on the type of business and the customers of the business. When the customers of the organisation are mainly other businesses, the organisation is not influenced much by the seasons, whereas with regular customers this might be different. 

    For those companies that do struggle with keeping afloat during the off seasons, diversifying might be a good solution.


    Additional resources 

    Podcasts: 

    Podcast on marketing strategies for seasonal businesses ‚ÄstMarketing Strategies For Seasonal Businesses | INKYMA¬†

    Videos: 

    Video on the Ansoff matrix and how to use it: https://www.youtube.com/watch?v=9lSk7rc289o  

    Articles: 

    Article on whether to choose for diversifying or not, and its benefits, challenges and information to help making a decision: https://saleschain.com/should-i-diversify-my-business-offerings  

    Report of the National Coastal Tourism Academy in the UK on the understanding of seasonality, including a case study on Bournemouth. ‚ÄstSeparate document.¬†¬†

    An article that gives tips to small businesses to overcome seasonality and also tips on how to include seasonal content in an online strategy. ‚ÄstTips for small businesses to overcome seasonality ‚Äď @BusinessVic Hub¬†

    A guide of Tourism Northern Ireland on diverisfying in the toursim sector ‚ÄstDefining, Diversifying and Expanding Your Product Offering via Seasons (tourismni.com)